Vatican bank affirms ethics over profit

VATICAN (CNS): The Institute for the Works of Religion—known as the Vatican bank—is striving to follow Catholic ethical practices in its investments, according to its latest annual report.

According to the 128-page report, published on May 22, the institute’s net profit for 2017 was €31.9 million ($308 million), which will all be donated to the Holy See. Net profit was down from €36 million in 2016, it said.

The main source of the institute’s €44.3 million ($427.8 million) income came from investments and management. Costs dropped slightly to €18.7 million ($180.58 million) in 2017 from €19.1 million in 2016.

The institute served approximately 15,000 clients with €5.3 billion ($51.18 billion) in assets at the institute. Individuals holding accounts must be Vatican employees or retirees or diplomats accredited to the Holy See. Bishops’ conferences, dioceses, religious orders and other official Catholic works also may have accounts.

A major objective achieved by the institute, according to the institute’s press release, was selecting investments that are consistent with Catholic ethics, such as the “respect of human life, creation and human dignity” as well as seeking to contribute to the “care of the common home,” as expressed in Pope Francis’ environmental encyclical, Laudato Si’.

Corporate social responsibility and the role of companies in creating a sustainable future, it said, are the two fundamental features in choosing investments. For this reason, the institute also “invested in projects that promote the development of poorer countries and are in line with the realisation of a sustainable future for future generations.”

The institute continued to avoid investments in companies “that violate or do not fully respect the globally recognised principles of human rights, labour standards, the fight against corruption and the fight against environmental crime,” it said.

The bank would be willing, it added, “to disinvest from existing holdings if compliance with these principles were no longer met.”

Santos Cardinal Abril Castello, president of the Commission of Cardinals supervising the bank, wrote in the report, that the institute “renewed its commitment to affirm the importance of ethics over profit through key ‘ethical’ decisions,” including legal strategies to protect its reputation.

For example, he wrote, that the institute chose to allow courts to establish penalties against past directors, managers, investors or consultants “who betrayed its trust and caused serious harm, in spite of the substantial settlement agreements proposed by some of the parties involved to repair the damage caused to the institute by their conduct.”

He wrote, “The institute refused to negotiate with the people who had brought discredit upon it, instead subordinating any compensation for reputational and economic damages to the establishment of responsibilities by the competent authorities and to their decisions.”

Monsignor Battista Ricca, who was appointed by the commission of cardinals to oversee the institute’s activities, wrote that there continues to be “a change of mindset” at the Vatican bank.

In the past, there had been “approaches that were a bit too breezy and not always careful about ethics,” but with clearer guidance and understanding of the institute’s aims, the “financial statements show that the logic of making money for the sake of it has gone by and money is to be used to meet the needs for which the institute was founded, i.e. help the activities of the Catholic Church.”

Citing Psalm 36:16, he wrote, “Better is a little to the just, than the great riches of the wicked.”